Solving The Foreclosure Crisis

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When thinking of a solution to the foreclosure crisis our country now faces, we have to analyze how this all started. People cannot afford their mortgages, and since their house is worth less than they are paying for it, now that the housing market has plummeted, why not just let the bank take their house rather than paying? The smart economic decision their by the homeowner would be to let the bank foreclose on their house and look to buy another for much cheaper. That is the problem. Due to the severe decline in housing prices, people who bought their house about five years ago are paying more than the house is worth. They are paying a mortgage that fits how much that house was worth five years ago. On top of that, the homeowner likely has a decrease in net income, an effect of the recession. Part of my solution to end the crisis would be to have government regulate mortgage rates. It is not socialism to have government step in when necessary and clean up the mess that the free market system had made. It is true that the government could do nothing. Let the banks foreclose the houses, and let the banks fail. Eventually the economy will fix itself. I do not know one person that I am close to that would ever agree to that, however. The government should be there to pull the economic levers, metaphorically speaking, when necessary. Government regulation of the mortgage rates from banks would help these people afford their house at the market price. Not the price it was five years ago.

Still, now that the house has a mortgage rate that matches the value of the house the homeowner has not been able to find work. In this economic recession, more and more people are losing their jobs or getting severe pay cuts. For a ...

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...ngs along those lines. This would be similar to Franklin D. Roosevelt’s New Deal. This would increase the number of jobs for people. With these jobs people can afford to pay for their house.

There is no single way to turn around the economy. It will be a slow process but there are ways to turn it. Dealing with the crisis of foreclosure, the government should do be doing these four things. They should be regulating the mortgage rates so that it matches the value of the houses now, decrease the interest rate so that the American people have more money to spend, lower taxes so that people have more money to pay towards their house, and increase government spending to generate more jobs. I believe the current presidential administration is doing the correct things. Along with my solution I believe that the rate of foreclosures can severely decrease.
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